Analyst Utilizes Supply And Demand Principles To Determine Bitcoin Price
18 May 2024 - 1:00AM
NEWSBTC
For analysts and investors alike, comprehending the variables that
influence price action in the complex world of cryptocurrency
markets is essential. Ali Martinez, a well-known cryptocurrency
expert, has recently provided insights into the fluctuations in the
price of Bitcoin by applying the basic economic theory of supply
and demand. Understanding Bitcoin Prices Through Supply And
Demand It is worth noting that any asset’s price movement,
including cryptocurrencies, is determined by the fundamental rules
of supply and demand. An asset’s price tends to decrease when
supply outpaces demand, while prices typically increase when supply
cannot keep up with demand. Related Reading: The Hidden
Forces Behind Bitcoin Price: Latest Insights From On-Chain Data
Thus, Ali Martinez has deduced the crypto asset’s price and
holders’ behaviour by applying the method and other on-chain
metrics. Martinez’s analysis demonstrates how fluctuations in the
market’s buying interest and the availability of Bitcoin are key
factors influencing its price trajectory. According to Martinez,
Bitcoin’s Realized Cap witnessed a significant increase mid-way
through March when BTC hit a new all-time high of $73,000. This
indicated that the majority of BTC’s long-term holders were likely
yielding gains at the time. As a result, several investors sold
their holdings, which led to a sharp rise in realized profits.
Following realized profits in March, long-term holders felt safe
adding over 70,000 BTC to their investments at these prices.
Meanwhile, when the market’s growing supply of Bitcoin exceeded
demand, the coin saw a substantial correction from the $73,000
level to the $57,000 level. Given that short-term holders are
more likely to sell their holdings due to price volatility, this
decline took Bitcoin below its realized price for short-term
holders, inciting fear in the market. However, despite investors’
concerns, the short-term holder’s Realized Price at the $65,500
level acted as an accumulation point. On the basis of this
principle, Martinez believes the likelihood of Bitcoin continuing
its upward trajectory will only increase when demand for the
cryptocurrency starts to exceed the supply of BTC accessible in the
market. Using BTC On Exchanges To Support The Principles Martinez
has underscored that the available BTC on crypto exchanges can be
used to confirm these supply and demand laws. He further noted that
over 30,000 BTC have been moved to private wallets for long-term
storage in May, indicating confidence among holders in the
potential worth of Bitcoin. Related Reading: Bitcoin Long-Term
Holders Accumulating Like In 2021: Is BTC Ready For A 15X?
Observing Bitcoin’s price using the MVRV Extreme Deviation
Pricing Bands, Martinez cited a retracement above the +0.5σ pricing
band at $64,600. Such an upswing has historically caused BTC to
test the pricing range of 1.0σ, which is backed by increasing
demand. Meanwhile, this price range at the moment is roughly
lingering at $77,000. Presently, the price of Bitcoin is trading at
$66,275, indicating an over 5% increase in the past week. Although
prices are up, its trading volume has declined by 24%, while its
market cap is up by 0.23%. Featured image from iStock, chart from
Tradingview.com
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